Abramovich sells his last big stake in Russia to Kremlin

Roman Abramovich, the billionaire owner of Chelsea football club, has sold his last substantial business interest in Russia, a stake in the oil firm Sibneft, to the Kremlin for £7.4bn, it was announced yesterday.

The disposal of his 72% holding to the state-controlled gas group Gazprom means most of the 38 year-old's assets are now in cash. Forbes magazine valued him at £8bn this year, although analysts said yesterday's deal could increase this to £10bn. The deal means a massive profit for Mr Abramovich who bought 51% of Sibneft at a privatisation auction in the mid 1990s. The shares, worth 30 cents each six years ago, are now valued at $3.80.

The move increases the power and reach of Gazprom - turning it into an integrated energy firm - but also allows the president, Vladimir Putin, to increase his grip on the country's oil and gas assets.

Mr Abramovich is the first of the oligarchs who made billions buying state assets at dubiously low prices, to cash in their Russian investments. Yet a spokesman for Sibneft yesterday denied speculation he would now leave Russia. "He will definitely stay very involved in Russia", he said, adding however, that Mr Abramovich "has always been a free, international agent". Recent reports have suggested that Mr Abramovich will accept a Kremlin offer for him to remain governor of Chukotka, an impoverished eastern province into which he has poured millions of dollars for social development.

Analyst Chris Weafer, chief strategist at Alfa Group Consortium, doubted the Kremlin would have agreed to such a high purchase price for a company that was state-owned a decade ago had there not been an agreement about where the money would be invested. Analyst Roland Nash at Renaissance Capital said: "I expect he'll reinvest a billion or two in the Russian market but stash away a few billion so he can play fantasy football for the rest of his life. You can't buy a Formula One team with Sibneft stocks, but you can with cash." The sale, aided by a loan from Western banks, further consolidates Gazprom's position as a global energy giant and Russia's biggest company. Yesterday it was worth £69.7 bn, about the GDP of Ireland last year.

Analysts said the deal would further boost Gazprom's worth to reflect its real market value. The top management at Sibneft is likely to be replaced, but the new tie-up is deemed by analysts to be a further attempt by Mr Putin to bring Russia's greatest assets - oil and gas - back into state hands.